8
A Complete Guide to the Futures mArket
 7. trading hours. Trading hours are listed in terms of the local times for the given exchange. 
(all U.s. exchanges are currently located in either the eastern or Central time zones.)
 8. Daily price limit. exchanges normally specify a maximum amount by which the contract 
price can change on a given day. For example, if the December corn contract closed at $4.10 on 
the previous day, and the daily price limit is 25¢/bu, corn cannot trade above $4.35 or below 
$3.85. 
some markets employ formulas for increasing the daily limit after a specified number of 
consecutive limit days.
in cases in which free market forces would normally seek an equilibrium price outside the 
range boundaries implied by the limit, the market will simply move to the limit and virtually 
cease to trade. For example, if after the market close the U.
s. Department of agriculture (UsDa) 
releases a very bullish corn crop production estimate, which hypothetically would result in an 
immediate 30¢/bu price rise in an unrestricted market, prices will be locked limit up (25¢/bu) the 
next day. This means that the market will open and stay at the limit, with virtually no trading tak-
ing place. The reason for the absence of trading activity is that the limit rule restriction maintains 
an artificially low price, leading to a deluge of buy orders at that price but few if any sell orders.
in the case of a very severe surprise event (e.g., sudden major crop damage), a market 
could move several limits in succession, although such moves are less common than in the days 
before near-24-hour electronic trading. 
in such situations, traders on the wrong side of the 
fence might not be able to liquidate their positions until the market trades freely. The new trader 
should be aware of, but not be overly frightened by, this possibility, since such events of extreme 
volatility rarely come as a complete surprise. 
in most cases, markets vulnerable to such volatile 
price action can be identified. some examples of such markets would include commodities in 
which the UsDa is scheduled to release a major report, coffee or frozen concentrated orange 
juice during their respective freeze seasons, and markets that have exhibited recent extreme 
trading volatility. For some markets, the limit on the nearby contract is removed at some point 
table 1.2 Contract Month Designations
Month ticker Designation
January F
February g
March H
april J
May K
June M
July n
august Q
september U
October V
november X
December Z